Organize the steps an economist would follow in the model-building process into their proper order.
- Develop a model based on simplifying assumptions
- Collect data
- Identify the problem
- Formulate a conclusion
A. 1. Develop a model based on simplifying assumptions. 2. Collect data. 3. Identify the problem. 4. Formulate a conclusion
B. 1. Collect data. 2. Develop a model based on simplifying assumptions. 3. Identify the problem. 4. Formulate a conclusion.
C. 1. Identify the problem. 2. Develop a model based on simplifying assumptions. 3. Collect data. 4. Formulate a conclusion
D. 1. Formulate a conclusion. 2. Collect data. 3. Identify the problem. 4. Develop a model based on simplifying assumptions.
Answer: C
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Which of the following is the situation in which firms outside a trade bloc shift the final assembling process of partially assembled products into a member nation of the bloc and then export the finished products to other nations within the bloc?
A) trade diversion B) trade deflection C) trade retention D) rules of origin
Tyrell has $50 per week to spend on good A, which has a price of $5, and good B, which has a price of $4 . He buys six units of A and five of B. The marginal utility of the sixth unit of A is 25, and the marginal utility of the fifth unit of B is 20 . Which of the following is true?
a. He is maximizing his utility. b. We cannot tell if he is maximizing his utility unless we know his total utility. c. He is not maximizing his utility and should buy more of A. d. He is not maximizing his utility and should buy more of B. e. He is not maximizing his utility because he is not spending all of his income.
Using Figure 1 above, if the aggregate demand curve shifts from AD3 to AD2 the result in the short run would be:
A. P3 and Y1. B. P2 and Y1. C. P2 and Y3. D. P1 and Y2.
Based on the figure below. Starting from long-run equilibrium at point C, an increase in government spending that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ creating _____gap. 
A. D; an expansionary B. B; no output C. B; expansionary D. A; a recessionary